Daniel Aguilar/Reuters, via Landov

Investigation

Walmart's Dirty Dealings

Surely destined for a Pulitzer, ‘The New York Times’ on Tuesday published a lengthy investigation into Walmart’s alleged payoffs in Mexico, finding that Walmart allegedly used bribes to circumvent the democratic process. Read the best revelations from the massive investigation. Plus, read the first report published in April.

12.18.12 3:56 PM ET

Teotihuacan, or what the Aztecs called the “city of gods,” has a temple complex and pyramids, and is central to Mexico’s culture. In 2003, Walmart de Mexico thought Teotihuacan’s exploding population and dependence on local shops was the prime spot for expansion. Walmart’s ideal location was a plot on Elda Pineda’s alfalfa field—it was close to the town’s main entrance and next to the historic pyramids. Walmart estimated that there would be 250 customers an hour. Unfortunately, a plan for new zoning was already being rushed through the government. And on the eve of the vote on Aug. 6, there was no notice that Walmart would be on Pineda’s land—there wasn’t even a sign that Walmart made a request.

Bribes Come, Map Changes

But later that month, Walmart’s American bosses approved an $8 million plan to build a Bodega Aurrera in Pineda’s field. Once the government’s Gazetta publishes a new zoning plan, it officially goes into effect. But before this happened, Walmart took some “curious steps”: it launched a study of the soil in Pineda’s field and it submitted an application for a permit. The Times found evidence on a computer disc that the zoning map was changed sometime between Aug. 6 and Aug. 20 to include a commercial zone on Pineda’s field. The new zoning plan was published on Sept. 11. The very next day, Walmart de Mexico authorized five bribes totaling $221,000, including a $52,000 bribe for the Bodega Aurrera. Walmart officials did not pay the bribes themselves; as always, that task was given to outside lawyers who would deliver untraceable envelopes of cash, sometimes up to $280,000 to “expedite” a single permit.

Roadblocks Don’t Matter

But Walmart was facing roadblocks to building a new store in Teotihuacan. The town’s director of urban development refused to grant the company a construction permit, largely because it lacked several approvals, like an environmental permit. But on June 11, 2004, Mayor Guillermo Rodríguez told the members of the municipal council to meet with representatives from Walmart to discuss the building project. “They say that if we don’t solve this quickly, they will leave,” he told them. A vote was held on the issue the following week. When a council member pointed out that Walmart had not even submitted a formal written request, Rodríguez replied, “That’s a detail we omitted.” The vote was unanimous in Walnart’s favor and construction began the following week. Although Rodríguez denies taking a bribe, saying, “I didn’t receive any money from Walmart,” he did begin a massive spending binge the very same month. He spent over $30,000 to begin building a new ranch and $1,800 on a Dodge. The car was used, but it was a large amount of money to spend in one month for someone whose salary was only $47,000 a year.

Bypassing the Pyramids’ Guardians

But the buck didn’t just stop with the council and the zoning officials. Because of the pyramids in Teotihuacan, the approval of the National Institute of Anthropology and History, or INAH, is necessary for any building permits. But local archeologists in the INAH say the agency had never been contacted for a survey, since a survey could very well kill the project. Residents called INAH to complain, and the archeologists went to the area’s top lawyer, Juan Carlos Sabais, in Teotihuacan, who would be the one who would to review the permit paperwork and prepare the official liberation letter. Sabais led a group of INAH officials to the site on July 16, and when the workers claimed to have an INAH permit, he ordered them to stop construction. By the time Sabais returned to his office, senior INAH officials from Mexico City were calling and demanding to know why he had ceased production. That was when he discovered that Walmart had managed to get construction permits without INAH permission. According to Cicero, the lack of permit was the result of an “official donation” by Walmart of $45,000 and a “personal gift” of $36,000. Every INAH official has denied receiving any money from Walmart, and instead insisted that Walmart did not need a survey due to a 1984 survey—which Sabais said the INAH dug up to justify its actions.

Dario Lopez-Mills/AP

A woman cheers as she enters the new Walmart located near the Aztec pyramids in the town of San Juan Teotihuacan, Mexico, on Nov. 4, 2004.

Here Come the Protests

By 2004, residents had caught on to what they suspected were shady practices by Walmart. Many suspected something “dirty” had taken place. Protesters demanded the mayor show them the construction permit—which is when Rodríguez admitted that Walmart didn’t actually have one. They asked him to stop construction and hold hearings, and he agreed to think about it—but two days later, Rodríguez issued Walmart a construction license. What the protesters didn’t know is that Walmart had already paid off Purificación’s neighborhood leaders—but the money came with strings: if there were any protests, Purificación’s leaders had to loudly and visibly support Walmart. While protesters began calling for Rodríguez’s resignation, the protest leaders themselves began getting calls urging them to drop their crusade. But the protests only grew—and then influential politicians began to take notice.

Lack of Evidence

Despite reports of possible bribes, Walmart’s leaders in the United States made no effort to investigate Walmart de Mexico. Roughly a year after the supermarket opened in Teotihuacan, Cicero met with Walmart’s lawyers and shared his allegations of corruption and bribery for the first time. His story was also relayed to executives who were on the international-real-estate committee. Despite the fact that the allegations came at the same time that the comptroller of the state of Mexico was investigating whether officials had broken laws, Walmart did not share any of Cicero’s information with authorities in Mexico. When the investigation was completed, the comptroller’s office announced that it had found no evidence of wrongdoing and said that those opposed to the building project have not presented any proof.